Whilst it might be great for the nation in terms of keeping the bank’s strong, APRA’s capital adequacy requirements are restricting the bank’s credit appetite particularly for working capital finance — making life tough for everyday business owners.
So where do businesses turn to in times of need? Increasingly non-bank lenders, free of the constraints placed on deposit taking institutions, are stepping up to the plate.
Whilst banks may have a lower cost of capital, debt advisors are increasingly aware of the need to appropriately match clients and credit expectations and are broadening their scope when it comes to potential funding partners.
Unlike traditional bank lines, which often require clients to meet relatively heavy ongoing financial covenants, the emphasis from alternative lenders tends towards a less complex terms sheet coupled with speed to market.
There are is a wide range of payment and funding solutions offered by alternative lenders, which can work on a standalone basis or in combination with bank funding to deliver the right mix of cost/benefit.
A new form of online cashflow
Octet, originally established as a specialist Supply Chain Financier, is delivering simple tech smart solutions all accessible from your mobile phone.
Receivables Finance, Unsecured Supply Chain Finance, Secured Supply Chain Finance and highly competitive foreign exchange solutions sit on a single online platform.
Receivables finance offerings effectively allow businesses to fund their growth, without the cash flow pressure. The cash received can be used to pay all business outgoings including payroll, fuel expenses, fund research and development, replenish inventory an, perhaps most importantly, allow businesses to meet tax and superannuation obligations on time.
Unlike traditional funding forms, these lines can be provided on the basis of the business itself, without reliance on bricks and mortar security.
Considering the current ‘heat’ in the property market, it is prudent to consider how a correction in a property’s value would affect a business’s funding lines. There is certainly a role for accountants in educating clients to understand that if the property is reducing in value the lender will want to see loans reducing as well.
Conversely for example in a receivables financing facility the line of credit is generally available up to 80-85% approved receivables and so as your business grows so will your funding line.
Octet also offer unsecured lending terms to ensure businesses get cash when they need it most. These lines allow customers to use Octet funds to pay overseas and local suppliers immediately, and repay those funds over a 120-day period.
Mixing it up all on one platform
As accountants, bridging the cash flow gap for a business can be time consuming. Thankfully, there are alternative lending operators which integrate finance solutions directly into the supply chain.
When it comes to finance, businesses need to think wider than traditional sources. Banks serve their part, but their rigid processes and policies may not work for all.
Taking advantage of alternative finance lenders, paired with traditional financiers such as banks, businesses will be bound to get the best of both worlds and have a stable access to funds when they need it most.
For further information, please contact
General Manager –Working Capital Solutions - Octet
Tel +61 2 9356 6300 Mobile +61 451 594 343
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